April, 2024

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How does the death of a spouse impact your separation? What rights do the estate and the separated spouse have in Ontario?

man with lawyer illustrating separated but not divorced and spouse dies in ontario

Disclaimer: This article discusses estate law.  It is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

In a perfect world, life would happen at the pace we need it to, and the timing of big life events would be in a certain order.  Unfortunately, that is not always the case. 

In some rare instances, you may be separating from your spouse when they pass away. What happens in that instance? And how can you make sure your estate plan is ready for anything?

In this article, we will talk about what happens if your spouse dies while you are in the middle of a separation. We will answer these questions: 

  • What is property equalization in family law?
  • Can a surviving spouse make a claim against the estate for equalization? 
  • Can the estate make a claim against the surviving spouse for equalization? 

If you want to learn more about how separated spouses are treated under the Succession Law Reform Act, please note that there have been changes that came into effect January 1, 2022 that impact what you may inherit. For example, marriage no longer legally revokes a previous will. We have an article on the subject here.  

A note for common-law spouses: property equalization only applies to married spouses  

This article only applies to married spouses. The property equalization portions of The Family Law Act do not apply to common law spouses. 

What is property equalization during a divorce? 

Property equalization is a fundamental principle in family law that aims to ensure fairness in the division of marital assets between spouses. It is based on the idea that each spouse is entitled to a fair portion of the property and assets that were acquired during the marriage. 

How is property equalization calculated under Ontario’s family law? 

Calculating an equalization payment involves two main steps. First, each spouse determines their individual net family property (NFP). This means assessing the value of their assets minus any debts as of the separation date and subtracting the value of assets minus debts as of the marriage date. If any property is jointly owned, such as the family home, each spouse includes half of its value in their NFP calculation.

Let’s use Spouse A and Spouse B as examples. First, each spouse calculates their individual net family property.

Spouse ASpouse B
Assets minus debts at date of marriage$20,000Assets minus debts at date of marriage$25,000
Assets minus debts at date of separation$100,000Assets minus debts at date of separation$45,000
Individual net family property$80,000Individual net family property$20,000

Next, the spouse with the higher NFP compensates the spouse with the lower NFP with half the difference. This is the equalization payment. 

In our example, the difference is $60,000. So Spouse A would pay Spouse B half of the difference (or $30,000). The courts may order an amount different from this calculation in certain circumstances, but this is the general principle. 

Now, imagine one of the spouses dies before this process begins. If you are the surviving spouse, what rights do you have to a share of your spouse’s property? 

Can claims be made against estates to protect the property rights of separated spouses?  

Short answer: yes.

Let’s consider our example above. Say Spouse A passed away before Spouse B filed a claim for their equalization payment. Spouse B can still file a claim, even though their former spouse has passed away. 

Even if the equalization process had not begun before the spouse’s passing, the surviving spouse retains the right to claim against the estate for their fair share of marital assets.

Can the estate make a claim against the surviving spouse for equalization?

Short answer: no.

In our example above, let’s say that Spouse B passed away. Can that spouse’s estate file a claim for equalization? It cannot. 

The estate cannot make a claim for equalization against the surviving spouse. It can continue an application that has already been filed, but it cannot bring a new application. The estate is at a disadvantage if an application for equalization has not begun. 

How does this impact Ontario families? 

If you are separating and in poor health, you should commence a court action to have your property divided sooner rather than later. That way, your estate can continue the action, and you can protect your property rights for your children or other beneficiaries. 

Comprehensive Legal Advice with Beeksma Law: Contact us today!

Navigating the intersection of family law and estate law requires expertise and insight into the nuances of Ontario’s legal framework.

At Beeksma Law, we understand the complexities and sensitivities involved in matters of separation, divorce, and estate planning. We understand how The Succession Law Reform Act affects other areas of law. Our experienced team is dedicated to providing comprehensive legal guidance tailored to your unique circumstances.

Whatever your situation, having a strategic advocate in your corner to create a strong estate plan can make a world of difference. Our compassionate and thoughtful approach ensures that your interests are safeguarded every step of the way.

Reach out to our team today for assistance with all things estate law. This includes succession law, intestacy (or if you spouse dies without a will), property outside Canada, and more! 

What to know before you buy a book of business from a financial advisor

financial advisor buying a book of business

Disclaimer: This article discusses purchasing a book of business.  It is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

If you’re a newer financial advisor, you might consider purchasing a retiring advisor’s business. This can be a strategic way to grow your business, but before you buy a financial advisor book of business, there are some factors to consider. 

For example, you want to ensure that you can handle new clients without sacrificing your current client base. You’ll also want to ensure that it’s the right fit for you and that you have the cash flow to afford the purchase price. 

Most importantly, you’ll want to make sure that the transaction is set up properly and that you do your due diligence first. In this article, we will discuss what factors you need to consider. However, each transaction is unique, which is why you’ll want to contact our team and discuss the details specific to your purchase. 

Why a book of business acquisition is unique

If you’re a financial advisor and find a book of business for sale, you should know that it is significantly different than other business purchases. For example, let’s say you were buying a cafe. That business has tangible assets, such as equipment and merchandise, which can be easily valued and assessed. 

Buying another advisor’s financial practice does not have that. It is primarily composed of intangible assets, such as client relationships and revenue streams.

This raises many questions, including:

  • How do you assign value to intangible assets like client relationships and revenue streams?
  • How will you transition into this business? Will there be a succession plan?
  • What will the role of the selling advisor be after the transaction? 

Many transactions we see lack the legal structure that should be in place. These deals are too large and worth too much to your future to leave to chance. Understanding these differences is crucial not only to acquiring the business but also to successfully integrating it into your current practice.

Is it a share purchase or an asset purchase (or both)? 

This is one of the most important questions you’ll need to answer, and you’ll want to make sure that what you purchase matches what you expect to get. 

First, what’s the difference? Share purchases involve acquiring ownership of the seller’s company, including all assets and liabilities. On the other hand, asset purchases entail acquiring specific business assets, such as client lists and contracts, while leaving liabilities behind. 

Many believe that a corporation owns a book of business and that a share purchase will entitle them to it. In many cases, this is not true, at least not without careful planning. 

CIRO (the Canadian Investment Regulatory Organization) does not currently allow corporations to receive the income stream generated by investment portfolios. It must be paid to a person, the licensee, who owns those revenue rights. Therefore, a purchase of the shares of a corporation would not entitle the buyer to receive that income stream. 

There are some strategies that can be implemented, but the vast majority of sellers have not done the years of foundational work and planning needed to make them possible. 

Should you require a valuation on the book of business? 

Short answer: yes. Let’s explain why. 

A comprehensive valuation provides insights into what you’re purchasing. These transactions involve a lot of money – you are buying a business! – and you want to make sure that the book is worth it. 

This can also impact your tax bill at the end of the year. Your taxes will be based on the value of the transaction. If you have overpaid for another financial advisor’s book of business, you are still on the hook for that tax bill. 

At Beeksma Law, we are connected with experienced business valuation professionals who can help you determine what this business is worth. 

Is there a transition plan after you buy a book of business?

The deal is not over once the transaction closes. 

You must consider a transition plan to integrate new clients into your existing business seamlessly. A well-thought-out plan will outline the steps and timelines for integrating the acquired business. It will also lay out client communications, integrating staff and technology and how the seller will support the buyer during the handover period. 

Communication is crucial; spelling out these plans within your agreement will prevent many headaches. 

Beeksma Law: Specialized legal advice for financial advisors 

Many clients I speak to about this type of transaction are unaware of the legal complexities involved in purchasing a book of business. However, at Beeksma Law, we have handled these transactions for many professionals in the financial services industry. We are happy to offer comprehensive legal services tailored to your unique needs. 

From structuring the transaction, negotiating and drafting the agreements and navigating regulatory requirements, we can help you start the next chapter of your business on the right foot. 

Reach out to our team today to learn more.

Do I need a lawyer to incorporate a business in Ontario? Can I set up a corporation without a lawyer?

Clients with lawyer looking at legal documents answering the question, do i need a lawyer to incorporate in ontario

Disclaimer: This article discusses incorporating a business in Ontario.  It is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

So you’re growing your business, and it’s time to consider incorporation. (If you’re unsure if it’s time to incorporate, we have an article on the pros and cons of incorporating your business.) 

Now, you’re likely deciding whether or not you need a business lawyer. After all, that is an expense in your business and every dollar counts. The question arises: do I really need a lawyer to incorporate my business? Instead, can I use my accountant or an online service like Ownr?

As with most legal matters, there’s no one-size-fits-all answer. It depends on various factors unique to your situation and business goals. This article explores some guiding principles and scenarios to help you make an informed decision.

However, we understand that each business is different, and generic advice may not fully address your needs. We encourage you to book a complimentary consultation with our team. By discussing your specific circumstances, we can provide personalized guidance tailored to your business.

What are the drawbacks of incorporating online? 

While online incorporation services are simple to complete, their simplicity can actually be their downfall. They often provide basic, one-size-fits-all solutions, overlooking the nuanced intricacies of your business objectives.

Without a nuanced, strategic look at your business and future goals, your company may struggle to adapt and thrive in an evolving landscape. This can limit your future growth and long-term success. 

As with many of our clients, your business will change over time. As it evolves, you’ll likely encounter situations requiring adjustments to your initial incorporation documents. These changes could include updating shareholder agreements or modifying corporate structures. In such cases, you’ll need legal advice to make these amendments correctly. Therefore, while online incorporating services offer convenience, they may not provide the comprehensive support required to navigate the complexities of business growth and legal compliance over time.

When do I need a lawyer to incorporate a business in Ontario?  

Complexity and Growth

Incorporating with a lawyer becomes essential when anticipating business growth or encountering complexity in the business structure. As your business expands, you may require different classes of shareholders or undergo corporate restructuring to maximize tax benefits and accommodate evolving needs.

Strategic Planning:
Lawyers provide invaluable strategic planning that online services lack. They delve into your long-term business goals, ensuring that your incorporation aligns with your aspirations. By asking critical questions about your business’s trajectory, they help tailor the incorporation process to your specific needs and objectives.

Coordination with Accountant
Accountants often recommend incorporation to optimize tax planning. Involving a business lawyer allows for seamless coordination between legal and financial strategies, making sure you get the most out of your incorporation.

When might you not need a lawyer for your incorporation? 

It’s not to say that every single incorporation requires that you hire a lawyer; nor is it a legal requirement under the Business Corporations Act. There are a few instances where you wouldn’t need to speak to a lawyer or law firm specializing in corporate law. 

For some new businesses that are simple and have no plans for growth, you may be able to get away with legal services provided by an online provider (such as Ownr). In other instances, experienced entrepreneurs may have a history of successful business ventures. They may have already worked with a business law firm and are well-versed in the incorporation process. They may not require the personalized assistance of a lawyer for each specific business venture. 

How will a business lawyer help you after you’ve filed your articles of incorporation? 

Think of a business lawyer as a trusted ally, not just during the initial incorporation phase but throughout your business journey. They’re there to help with all your legal needs, from drafting contracts to ensuring compliance and even guiding you through expansion plans. Plus, they’ll make sure your minute book is always up to date, keeping all your critical corporate documents in order.

As your business grows and evolves, you’ll encounter many legal situations. That’s where your lawyer steps in, offering expert advice on everything from business operations to contract negotiations. Whether you’re sealing deals or resolving disputes, their legal expertise ensures you’re always on the right track. With their help, you can navigate the complexities of business and contracts with confidence.

More Resources for Ontario Business Owners 

At Beeksma Law, we have prepared several blogs designed to help business owners. Perhaps you are deciding between a sole proprietorship and a federal or provincial corporation. You might need answers to common questions, like how to register my business name. Or you may be wondering what resolutions and other legal documents you need to keep in your minute book. If so, please look at our previous blog articles for more information.  

Beeksma Law:  Strategic legal advice for small business owners 

In conclusion, when considering whether you need a lawyer to incorporate your business in Ontario, it’s essential to weigh the benefits of legal assistance against the potential drawbacks of going it alone. While it may be possible to incorporate a business without a lawyer, especially for simple structures or experienced entrepreneurs, Ontario’s business regulations and the advantages of strategic planning underscore the value of hiring a law firm specializing in business law.

A lawyer specializing in business law can provide invaluable guidance throughout the incorporation process, ensuring compliance with the Ontario Business Corporations Act and other regulatory requirements. From drafting resolutions to navigating legal considerations such as tax planning and shareholder agreements, a lawyer can offer expert advice tailored to your business needs.

To explore how Beekma Law can assist you in incorporating your business in Ontario and provide ongoing legal support, we invite you to book a call with our team. Our experienced lawyers are here to help you establish the proper legal structure and entity for your business, providing peace of mind and strategic legal guidance every step of the way. Don’t hesitate to contact us for personalized assistance with your business incorporation needs.